(Bloomberg) -- Argentina will face a severe recession and triple-digit inflation rates next year with or without the major economic policy changes libertarian President-elect Javier Milei pledged after winning Sunday’s election, according to the Institute of International Finance.
“A painful recession in 2024 seems inevitable, no matter what policy framework prevails,” Martin Castellano, the head of Latin America research at the institute, wrote in a research note published Monday. He sees the Argentine economy contracting 1.3% in 2024, after a 2.4% drop this year.
Inflation will likely remain above 100% with an “unavoidable” currency depreciation ahead, Castellano projects.
Read More: Milei Rides 143% Inflation Fury to Win Argentina Presidency
Milei, an economist with little governing experience, surged to a larger-than-expected victory over Economy Minister Sergio Massa, winning a race defined by voters’ anger with spiraling inflation by more than 11 percentage points.
He promised swift policy changes during his first speech as president-elect, telling Argentines that gradualism is not an option. But Milei avoided his most radical proposals, including plans to scrap the peso for the US dollar and abolish the central bank.
Milei has also pledged massive spending cuts in order to reduce fiscal deficits, and his overwhelming margin of victory reflected a “strong public mandate for pursuing economic stability,” according to the institute. But high energy and commodity prices, it said, may boost exports and provide incentive for the new government to opt for moderate changes capable of gathering more political support.
“Complacency is a key risk for 2024,” Castellano added.
US-listed Argentina equities soared on Milei’s win, with state-oil driller YPF’s shares up as much 43% on bets the maverick outsider will reverse years of disastrous policies. Analysts are still awaiting his selection of cabinet members, a timeframe for the removal of currency controls and a possible rewriting of Argentina’s debt agreement with the International Monetary Fund.
“Progress could be slower and more gradual than expected,” Castellano wrote.
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